Content is free. Formats are not
In a world of digital goods, content providers are unlikely to get paid for raw content anymore, and must instead focus on the formats in which content is delivered.
Content may be free, but the format in which we buy it certainly is not. As Apple, Google, Red Hat, and others increasingly demonstrate, consumers and enterprises are happy to pay for "free" when packaged in convenient formats that add value to digital goods.
Over the years, I've paid Morrissey several times for his Bono Drag album: cassette, CD (twice), iTunes, concerts. I'm reading Moby Dick (again), and have bought it in hardback and paperback, not to mention Kindle, formats. The Economist? I pay for the right to read it in magazine format, because I hate the thought of trying to read it online.
All of these (re)purchases strike me that the media world may have problems, but they are mostly of discovering convenient formats in which to deliver content. Formats that suggest, and sometimes demand, payment.
Apple gets this more than most companies. Before iTunes, many of us shifted to using peer-to-peer file-sharing (stealing) services like Kazaa, not because we wanted to steal, but because we wanted the immediacy of digital goods, and couldn't understand why the music industry insisted on us driving to a physical store to purchase a physical CD (to play digital goods).
Along came iTunes and it became easier to buy the song for 99 cents than to steal it.
Of course, iTunes wasn't the only "format" pioneered by Apple. Its iPod also made the music portable. The iPhone increased this advantage by meshing digital entertainment with work (phone).
Indeed, the iPhone introduced another winning "format": the App Store. Over 2 billion downloads and 85,000 available applications later, Apple has demonstrated significant value in aggregation of "content" (in this case, applications) in an easy to discover and consume format.
But it's not just Apple that benefits from such format shifts, as SourceForge's Paul Huff comments:
It seems like Red Hat, Apple, Google, and Microsoft...all win because of value added via aggregation/packaging/ease of use, which is why business models like Cloudera['s] and Lucid Imagination['s]...make a lot of sense to me: packaging can add immense value.
And maybe packaging is the wrong word...[It's really about] surrounding something free with something that facilitates the use of the free.
To me, too. Whether software or music, the key is finding the right format to make "abundance" manageable,.
Importantly, such formats must facilitate and not inhibit the ease of distribution that digitization enables. This is why DRM worked fine for Apple's iTunes but why its rough equivalent--the pay-wall--may not work nearly as well for newspapers and magazines.
If I'm following a link off Twitter the last thing I want is to have my interest bogged down by a pay-wall. I might, however, be happy to subscribe to a Twitter service that automatically lowers the pay-wall. In other words, a walled garden around The Economist may annoy me, but a metered garden accessed through Twitter, similar to iTunes and music, would not.
It's all about getting the format right.
In software, I've described current business models for open source as a transitory period, as The 451 Group's Matt Aslett suggests, perhaps cloud computing is a natural evolution from open source.. I suspect we'll come to see cloud computing as a convenient new format to distribute otherwise free software. Or,
Good content is a necessary precondition to getting paid, but it's not going to be reason we pay anymore. That reason for payment is the format in which the content is delivered.
Perhaps it's always been that way, but the physicality of the delivery mechanisms confused us: we were buying the paper but thought we were buying the news.
Follow me on Twitter @mjasay.